State Sen. John Bonacic accuses insurers of delaying flood payments

ALBANY, N.Y. -- At a state Senate Republican roundtable Monday focusing on problems that followed the floods of 2011, Sen. John Bonacic accused insurers of dragging out settlements to policyholders in order to boost profits.

"What I find is that when there is a claim, whether it is a property damage claim, whether it is a personal injury claim, there is a strategy with the insurance industry to hold onto the funds as long as they can," said Bonacic, R-Mount Hope. "And they invest them. And they delay, and they delay, and they delay. The thinking is, if we can hold onto the funds and put that victim off for two to four years, we will cover that loss with the earnings that we will make from our investments."

"We can talk as much as we want about who are the good guys that stepped up, who are maybe the bad guys -- we had one insurance company mentioned today. But how do we get over the generic problem of how profits and losses are made and how do we standardize that to deliver justice to the victim."

"I've been with Allstate for 34 years and frankly I'm taken aback by your comments," company Vice President Paul Tracey said. "There is no such strategy that you suggest. I've been in the claim department for 34 years. The claim department, there is no such strategy whatsoever to hold onto funds. It's been my experience -- I've been directed and I've directed others, to pay claims as fairly and quickly as possible."

"There's actually an incentive to get the claims paid quickly," said Don Griffin, vice president, Personal Lines at Property Casualty Insurers Association of America. "They want to do that because the insurance company actually gets a percentage of the claim."

He said there are major differences between homeowners and flood insurance, with the latter designed to cover catastrophic losses. For example, the only coverage for basement damage under flood insurance is for loss of heating, air conditioning and similar HVAC equipment, and policies don't cover the loss of contents of a house.

Earlier, Allstate was slammed by Schoharie County Treasurer Bill Cherry, who recounted his story of how the insurer has treated his family in the aftermath of the destruction of his village home. He had flood insurance on his 19th century residence, though it is not located on a flood plain.

"Our house was destroyed in the flooding," Cherry said. "It is still standing but it is empty, it is gutted, foundation walls collapsed. It is unlivable at this point. We are in an apartment. My experience regarding the flood insurance, unfortunately I don't have anything good to say."

"I'm sure that there's very well meaning people in the insurance industry that go out of their way to try to help folks, but my family had a terrible time with the flood insurance."

He said he stopped counting the number of insurance adjusters who handled his claim after the sixth one was replaced.

Monday's meeting was the latest in a series of forums Senate Republicans have held to draw attention to the losses suffered by people in the Catskills and upstate valleys as a result of last summer's back to back storms.